It is now widely accepted that purchasing goods or services in the domestic sector is more efficiently carried out if the purchase transaction does not use cash. Cash is often perceived as, at best, cumbersome and, at worst, an unnecessary risk to personal safety, for example, from muggings and also financially, from theft. Current trends are to move towards a "cashless society" and the momentum of this trend is gaining the support nationally and internationally.
The existence of credit cards goes quite a long way to meet the ideal requirements in respect of cashless transactions. For example, it contains the owner's identity number imprinted on a magnetic strip on the back of the card, together with the owner's name embossed on the front of the card. A holograph of the owner's signature is written on the back of the card and is the only means of confirming the correct ownership of the card. Nevertheless, the present type of credit card has severe limitations in providing the ideal solution for a cashless transaction. For such a transaction to commence, the credit card must physically come into contact with either a paper voucher on which the embossed details are transferred by carbon copy or the card must be physically passed through a swipe machine so that the magnetic strip is electro-magnetically read by a magnetic head. Both of these techniques require intimate physical contact of a machine with a credit card. The next step in the transaction is for the owner of the credit card to append his signature on the paper voucher. The vendor in the transaction compares, or should compare, the signature on the back of the card with that on the voucher. Assuming that there is a fair degree of resemblance between the signatures, the vendor then accepts that the transaction is complete. In order for the card owner's account to be debited, the vendor either sends copies of the carbon slips to the credit card company or the information from the magnetic swipe reader is electronically stored and usually transmitted over a telephone link. In the former case, one of the problems is loss of credit card slips or even damage to the slips such as to render details of the credit card unusable, with the result that the owner's account does not get debited and this results in a loss to the vendor. In the case of a card swipe machine, the information is periodically scanned from a central computer which polls all the swipe machines to which it is linked and the details of the transaction are then fed to a central storage location where the information is then entered into the user's account and a bill is then prepared and sent to the user.
One problem with the existing system is that card fraud is very easily perpetrated. This is mainly because the signature appears on the reverse side of the card. A signature can generally be perfected by repeated copying so that it appears similar to that on the card. The unauthorised user of the card can then forge the signature to complete a fraudulent transaction. Even is a stolen or lost card is reported, there is often considerable time before all premises and businesses accepting that type of card are notified. In the case of a swipe card, notification is carried out remotely and periodically over the telephone line. Nevertheless, a professional criminal is able to verify whether the card is still valid with minimal risk and to use the card on a day-to-day basis with minimal risk of being apprehended.
A further disadvantage of existing credit card systems is that it is not possible to use the card without physical contact. Therefore, it is not presently feasible to use a credit card for parking, for paying tolls on a toll road or bridge or the like and in such situations, cash is still the preferred method of payment.